In an attempt to jump-start Canada’s jobs recovery, the Federal Government introduced The Canada Recovery Hiring Program (CRHP) in the 2021 federal budget on April 19, 2021. The main purpose of the CRHP is to provide eligible employers with the ability to offset a portion of their labour costs between the qualifying periods of June 6, 2021, to November 20, 2021.
How does the CRHP work?
The CRHP works in conjunction with the Canada Emergency Wage Subsidy (CEWS). To qualify for the CRHP, employers must have experienced a decline in revenue, which is calculated in the same manner as the CEWS. Therefore, the revenue decline must be more than 0% for the June 6, 2021, to July 3, 2021, qualifying period. For the qualifying periods between July 4, 2021, to November 20, 2021, the revenue decline must be more than 10%.
Similar to the CEWS program, the CRHP utilizes the general or alternative method when calculating the revenue decline. To calculate the revenue decline for a specific reference period, please refer to the table below.
|Timing||Period 17: June 6 - July 3||Period 18: July 4 - July 31||Period 19: August 1 - August 28||Period 20: August 29 - September 25||Period 21: September 26 - October 23||Period 22: October 24 - November 20|
|General Approach||June 2021 over June 2019 or May 2021 over May 2019||July 2021 over July 2019 or June 2021 over June 2019||August 2021 over August 2019 or July 2021 over July 2019||September 2021 over September 2019 or August 2021 over August 2019||October 2021 over October 2019 or September 2021 over September 2019||November 2021 over November 2019 or October 2021 over October 2019|
|Alternative Approach||June 2021 or May 2021 over average of January and February 2020||July 2021 or June 2021 over average of January and February 2020||August 2021 or July 2021 over average of January and February 2020||September 2021 or August 2021 over average of January and February 2020||October 2021 or September 2021 over average of January and February 2020||November 2021 or October 2021 over average of January and February 2020|
*Please note: The filing deadline after the end of each qualifying period is 180 days.
What is the CRHP subsidy amount?
To calculate the CRHP subsidy amount, the incremental remuneration is multiplied by the applicable hiring subsidy rate for that qualifying period. What does incremental remuneration for a qualifying period actually mean? This refers to the difference between remuneration paid by an employer in a qualifying period and remuneration paid by an employer in a baseline period. March 14, 2021, to April 10, 2021, is the initial baseline period.
The table below outlines the hiring subsidy rates for each qualifying period
|Period 17: June 6 - July 3||Period 18: July 4 - July 31||Period 19: August 1 - August 28||Period 20: August 29 - September 25||Period 21: September 26 - October 23||Period 22: October 24 - November 20|
|Hiring subsidy rate||50%||50%||50%||40%||30%||20%|
*Please note: Qualifying Period 17 of the CEWS would be the first qualifying period of the CRHP.
Who is eligible for CRHP?
Employers such as Canadian-controlled private corporations (CCPCs), individuals, not-for-profit organizations including registered charities, and certain partnerships would be eligible for the Canada Recovery Hiring Program (CRHP)
Employers who have experienced a decline in revenue of more than 0% for the qualifying period of June 6, 2021, to July 3, 2021, qualify for the program. For the qualifying period between July 4, 2021, to November 20, 2021, the revenue decline must be greater than 10% in order for employers to qualify for the program.
What is the eligible remuneration for each employee under the CRHP?
As with the CEWS, the CRHP includes salary, wages, and other remuneration for which income taxes are withheld. Ineligible expenses include severance pay, stock option benefits, and the personal use of a car.
$1,129 per week is the maximum remuneration each employee is eligible for under the CRHP. Restrictions are in place for non-arm’s length employees, where their eligible remuneration for the purposes of calculating the CRHP for the week cannot exceed their baseline remuneration for that week. Employees who have been furloughed are not eligible for the subsidy.
What does this mean for employers?
To be eligible for the CRHP program, employers must have experienced a revenue decline greater than 10% starting with the July 4, 2021, qualifying period. This requirement coincides with a qualification change to the CEWS program, which presently applies to any decline in revenue.
Employers will need to compare which program, the CEWS or CRHP will be more beneficial for them, as eligible employers can only claim one grant for a particular period, starting with the June 6, 2021, qualifying period.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.